Chosun Biz and ICSmart report that Samsung Electronics plans to reduce NAND wafer production at its Xi'an factory in China by over 10%. Amid a global NAND oversupply, this decision likely aims to stabilize prices and reduce losses in its NAND business.
In contrast, SK Hynix's expansion of NAND supply suggests Samsung may recognize its current NAND process technology is no longer sufficient to maintain its previously dominant productivity levels.
Samsung reportedly scales back NAND production to address oversupply
Chosun Biz and Nate report that Samsung plans to cut NAND wafer production at its Xi'an factory—its largest NAND facility—by over 10%. Monthly output is expected to fall from 200,000 wafers to 170,000 wafers. Production adjustments at Hwaseong's lines 12 and 17 will further lower overall capacity. Samsung has yet to officially confirm this development.
During the 2023 NAND market downturn, Samsung halved its wafer input to combat oversupply and falling prices. Similarly, SK Hynix, Micron, and Kioxia reduced production, helping to stabilize the market.
In 2024, increasing demand led Samsung and other NAND producers to restore production capacity. Samsung ramped up its monthly output to around 450,000 wafers last year.
SK Hynix increases NAND output, bolstered by technological advances
SK Hynix plans to steadily increase NAND production this year, buoyed by strong sales and profitability in the enterprise SSD market.
SK Hynix recently began mass production of the world's first triple-level-cell (TLC)-based 321-high 4D NAND flash, reaffirming its leadership in NAND technology, as per SK Hynix's newsrooms.
Analysts warn that SK Hynix's decision to boost production poses risks due to ongoing NAND oversupply and falling prices.
Despite these concerns, SK Hynix remains confident that improved product performance and production efficiency will secure its competitive edge in the challenging NAND market.
An industry insider told Chosun Biz, "Amid NAND price declines and oversupply, cutting production seems logical. However, SK Hynix's move to increase supply signals confidence in its technology and suggests a potential competitive edge over Samsung."
SK Hynix's advances in stacking technology position it to reshape the global NAND market. Samsung leads the global enterprise SSD segment with a 43.4% share, followed by SK Hynix at 27.9%. Together, these two South Korean giants control over 70% of the market, making their strategies pivotal to the industry's direction.
Global NAND flash market at a crossroads amid oversupply
Since the fourth quarter of 2024, weak consumer electronics demand has slowed NAND flash market growth, with heightened competition among key players such as Samsung, SK Hynix, Kioxia, Western Digital, Micron, and YMTC driving prices down. Some manufacturers have reduced wafer production to address oversupply, according to Jiemian.
Dramx reports that weaker-than-expected demand caused NAND flash wafer contract prices to decline during the third quarter of 2024, with a further drop exceeding 10% projected for the fourth quarter. While enterprise SSDs may see slight price increases of 0% to 5% due to steady orders, PC SSDs, and UFS products remain under price pressure as end-product sales falter, prompting conservative procurement strategies. TrendForce had earlier forecasted an overall contract price decline of 3% to 8% for the fourth quarter.
The latest TrendForce report predicts rising inventories and declining demand for NAND flash suppliers during the first quarter of 2025, with average contract prices expected to drop by 10% to 15%. In this context, reports of Samsung scaling back NAND wafer production appear unsurprising.
DRAMeXchange data shows that by October 2024, the fixed transaction price for general NAND flash products used in memory cards and USBs (128Gb 16Gx8 MLC) had dropped to US$3.07, marking a 29.18% quarterly decline from US$4.34. Prices fell for two consecutive months, from US$4.90 in August, with October's 11.4% drop exceeding September's decline.
163.com reports that although Samsung remains the leader in production capacity and market share, rising price competition in key sectors such as PCs, mobile devices, and servers has gradually eroded its profitability.
The NAND flash market has been in a prolonged downturn for over a year due to oversupply. Although enterprise SSDs, fueled by AI data center demand, offered a brief recovery, the market now stands at another critical juncture.